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Unpublished Paper
The Choice-Necessity Paradigm: Rethinking Debtor-Creditor Relationships in the Consumer Context
ExpressO (2007)
  • David Fuller
The choice-necessity paradigm is a new approach to understanding the problem of rising rates of consumer bankruptcy. The choice-necessity paradigm uses an analytical structure that is based on a combination of the two dominant analytical models for explaining the increased rate of consumer bankruptcy filings: the structural model and the cultural model. The structural model emphasizes social and economic factors that cause debtors to rely on consumer credit, and increase the risk of bankruptcy filing. Although the structural model defines the problem and identifies the risk to consumers, it does not solve the problem, because it does not adequately balance risks to consumers against the reasonable expectations of creditors. In contrast, the cultural model is based on the hypothesis that debtors act opportunistically, acquiring goods with debt and then discharging that debt in bankruptcy. Although this goes farther in protecting the reasonable expectations of creditors, it does not protect consumers who are legitimately subject to structural forces. This puts the structural and cultural models in tension with one another. The choice-necessity paradigm breaks that tension by combining the two models and adding an analysis of individual liberty interests in debtor-creditor relationships, and an analysis of social and political concerns related to rising rates of consumer bankruptcy. The choice-necessity paradigm employs a two part analytical structure for consumer debt, asking first if the debtor’s choice was constrained in acquiring the debt, and then asking if the debt represents either an absolute necessity or something of recognized social value. This article presents the choice-necessity paradigm through three exemplars of debt that work together to progressively illustrate the operation of the paradigm. The first exemplar, consumer debt, represents debt acquired subject to a choice constraint. The second exemplar, healthcare debt, represents a debt that is absolutely necessary to acquire. The second exemplar also illustrates the proposed preemptory discharge for debts that represent an absolute necessity. The third exemplar, education debt, represents a debt of recognized social value. This analytical structure is designed to balance the parties’ relative liberty interests, and to account for the social and political costs of the bankruptcy treatment of those forms of debt.
Publication Date
July, 2007
Citation Information
David Fuller. "The Choice-Necessity Paradigm: Rethinking Debtor-Creditor Relationships in the Consumer Context" ExpressO (2007)
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